crazy rich
arthur hayes lives large. like bobby axelrod-in-big billions. Simply replace New York with Hong Kong and infuse it with a dose of Silicon Valley, where unicorns spring from the minds of irrepressible company founders, and, well, you get the picture. One minute Hayes is pounding powder in Hokkaido, the next he’s crushing it at an underground squash court in downtown Hong Kong’s Wall Street. And all the while he keeps a keen eye on an obscure-sounding currency exchange that he built from scratch and through which more than $3 trillion has flowed.
Handsome and fabulously wealthy screen star, the African-American banker turned maverick epitomizes the contemporary pioneer of financial technology. But the feds describe Arthur Hayes differently: a wanted man who “disobeyed” the law by operating in the “shadows of the financial markets.” Hayes’s indictment was made public in October and he remains at large in Asia as prosecutors in New York await his arrest and trial on two felonies, which carry a possible 10-year prison sentence.
Reading: The rise and fall of a bitcoin billionaire
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This is a story of new money versus old, financial genius kids eclipsing the banking old guard, and American policymakers trying to apply 20th-century law to 21st-century innovation. Prosecutors allege that Hayes and his business partners violated bank secrecy law by failing to implement and maintain a proper anti-money laundering program to weed out bad guys and dirty money. Meanwhile, Hayes’s colleagues in the crypto world believe he is being punished for creating a nifty product that has baffled lawmakers, hounded regulators, and, once it became wildly popular, posed a threat to some of the world’s cryptocurrencies. the most important players in the markets. Added to the chorus of voices are some high-level legal experts who believe that the United States of America v. arthur hayes is largely unprecedented.
at a time when the sec is apparently doing the bidding of the titans of wall street, eager to punish the unwashed masses of day traders for sinking bank and hedge fund trading positions in gamestop and other stocks Hayes could be patient zero when it comes to exposing the hypocrisy in high finance that is now coming to light.
cryptocurrency gold rush and a backpack full of money
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hayes, 35, fell silent in October. but the cryptocondor hasn’t always been so elusive. Born to middle-class parents who worked for General Motors and were beholden to the auto giant’s ever-changing fortunes, he divided his formative years between Detroit and Buffalo, where his mother, Barbara, moved mountains to get her talented son into Nichols. . school, a leafy private institution founded in 1892. “He succeeded in everything from his studies [to] the sports field, to making lasting friendships,” says a testimonial, with Barbara, on one of the site’s fundraising pages school website. “Nichols provided him with the environment, the encouragement and, at one point, the scholarship to thrive.” Hayes, in return, has given back: funding a scholarship that guarantees “a deserving student will experience the excellence of a Nichols education and the lifetime benefits it brings.”
after attending wharton business school, he headed to hong kong, where he worked at deutsche bank and citibank as a market maker for exchange-traded funds, or etfs, hybrid securities that, like mutual funds, , diversify an investor’s risk, but can be traded like stocks. Hayes was in a hurry when a pink receipt arrived in May 2013. “Bankers tell you everyone has a bullet with their name on it,” he explained one afternoon over tea at Marina Bay Sands in Singapore, the iconic hotel featured in the finale. of crazy rich Asians. he was wearing his usual attire: tight-fitting t-shirt, jeans, and an expensive watch (a hublot big bang). “He was not married, he had no children, he had no obligations. he had been an investment banker, so he wasn’t sleeping on the streets. he wanted to build something. ”
(I interviewed Hayes and some of his minions in Hong Kong, Singapore, and New York in 2018 and 2019. Since the October indictment, I have spoken extensively with insiders who know and are in communication with Hayes and his two defendants. business partners, ben delo and sam reed. several of these sources requested anonymity so as not to prejudice pending legal proceedings; on the advice of attorneys, hayes, delo and reed opted for not commenting on this story).
but back to that letter of termination. Eight years ago, Hayes, out of a job, decided to go solo, combining his ability to design novel financial instruments with a new passion: cryptocurrencies. specifically, bitcoin.
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